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UPS Corporate close-up (chart) NEW ADS STAKE OUT DELIVERY LEADERSHIP CLAIM

By Published on .

ATLANTA-Armed with a new corporate strategy and a pocket full of cash, United Parcel Service has one slightly egotistical goal. The package-delivery giant would like to hear "UPS it" overtake the ubiquitous "FedEx it" in everyday parlance.

To accomplish that, the company started a TV and print campaign Feb. 4 with a bit of an attitude. Ads from Ammirati & Puris/Lintas, New York, themed "Moving at the speed of business," stake out the claim that UPS is the leading delivery service, based on the broad range of options it offers.

Analysts say a leadership claim in an industry of blurred, non-distinct markets is difficult to prove.

Going by sheer numbers, the Colography Group, an Atlanta research company, says UPS has a larger ground market than its competitors, but trails Federal Express in the air. In terms of shipments for all categories, FedEx's volume share is 45.1% to 25.9% for UPS. However, UPS is No. 1 in parcels and documents, with 3 billion in 1994. And it is the only delivery company that services every address in the U.S.

"Our ad campaign goes beyond the overnight delivery market," said Paul Meyer, UPS national advertising manager. "We are beyond the basic service offerings and now have a value-added capacity of management of information as well .*.*. This isn't about air vs. ground, overnight vs. 2 to 3 days, or us vs. them. It is the consistent repositioning of our company and what we can do for a customer no matter what their size."

The shipper's new "supply chain" management strategy is to move and store materials plus provide an information system to track their whereabouts.

"We want to be our customers' source for total supply chain management," said Joe Pyne, VP-U.S. marketing.

"A manufacturer wants to manufacture. We want to-and now we can-do the rest," said John Al- den, VP-business development, who added the system will result in complete product handling.

UPS' total management philosophy was borne out with its recent purchase of SonicAir. SonicAir not only gives UPS another service-same-day, next-flight-out delivery-it also comes with warehouse and logistical services. UPS management says the purchase also complements the company's Early A.M. service, where delivery is promised by 8:30 a.m., as well as its three-day select service introduced in 1993.

"If an auto assembly is down due to a part, and the manufacturer can't wait until the next day for that part, he now can have it in hours with UPS," said Mr. Alden.

"We bring a unique solution to problems that can transcend service," said Mr. Pyne. "The mode is not important, nor is speed at any cost. Distribution absolutely is important, and that is where we can craft a solution."

Still, UPS isn't leading the industry in all delivery innovations. For example, its online customer automation system announced in November won't be available until the second quarter of this year. FedEx announced a similar product the day before UPS did, and the FedEx service already is in operation.

And some of UPS' recent additions, such as the next-flight-out and Early A.M. service, are niches that competitors doubt are viable due to low volume.

"But at $150 a delivery, next-flight-out is a pretty large market for UPS," said Paul Schlesinger, VP-research at Donaldson, Lufkin & Jenrette, New York. He said one in three companies in the U.S. needs same-day service at some point.

All the activity at UPS has led some to speculate the shipper is in a major acquisition mode. Officials deny that, saying there are problems to correct first, including the growing perception that UPS is ceding the home delivery market and difficulties the shipper has encountered with international service.

As for home delivery, Mr. Alden said UPS will not give up the niche on which it built its reputation, especially since home offices are proliferating.

Problems with international delivery are somewhat more complex. Chief among them: The company must make money soon in Europe, something Federal Express took a long time to do.

UPS hasn't made money on its international business since it began its big push in Europe in the early 1980s. Last year, UPS lost $280 million overseas; the cumulative figure is more than $1 billion. And, Mr. Alden said, he expects a slightly bigger loss overseas this year. Still, the losses are not cause for major concern; analysts say overall profits could reach $1 billion for 1994, with $3.8 billion in retained earnings-earnings not paid out in cash dividends to shareholders. UPS has what analysts consider a low debt of about $800 million.

When will UPS turn the European market around?

"It won't be in 1995," said Mr. Alden. He cited an "invisible European economy" as one reason UPS is losing money overseas. At the same time, UPS delivered more packages in Europe than any competitor.

Some on UPS' management council believe there isn't anything wrong with the company's international business that a few hundred thousand more deliveries won't help.

"But it has to be done. They can't just say tomorrow," said Mr. Schlesinger. "UPS is facing a difficult competitive environment. With RPS growing fairly rapidly on the ground, they probably are more than a nuisance to them. UPS is fighting in the air with Fed-Ex, and FedEx will be going after the last segment of business that UPS has, the short-haul, ground-delivery business-to-business traffic."

Mr. Alden, citing logistical difficulties in Asia, said UPS will focus on deliveries within given countries. He said Germany, France and Spain, along with Canada and Mexico, offer the most potential.

Mr. Alden said UPS is in Europe to stay.

"We won't do what FedEx did," he said. "We knew we were going to lose money. And we did."

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